China orders audit of local govt debt

China's Cabinet has ordered an urgent nationwide audit of debts owed by its local governments, reflecting official unease about potential financial threats from a rise in unreported liabilities.

The government announced the audit in a one-sentence statement on Sunday. The ruling Communist Party's main newspaper, People's Daily, said the Cabinet sent an "urgent message" ordering the audit and telling local audit officials to suspend other work until it is completed.

The audit underlines concerns over a rise in borrowing by China's local governments and threats to the banking system if they default.

Chinese leaders have expressed confidence most of those debts can be repaid. But a deputy finance minister said this month the total amount of borrowing was unknown.